Japan jobless rate hits five-year high in May

LisaTwaronite

TOKYO (MarketWatch) -- Japan's unemployment rate rose to a five-year high in May, according to government data released Tuesday, a sign that recently encouraging economic news has yet to affect the recession-hit labor market.

The number of unemployed persons rose to 3.47 million, data from the Ministry of Internal Affairs and Communications showed, marking an increase of 28.5% from the same period last year.

Seasonally adjusted, the unemployment rate was 5.2%, the highest since September 2003. Economists had expected the jobless rate to come in at 5.1%, according to a survey of economists by Dow Jones Newswires and Nikkei.

A separate set of data from the Ministry of Internal Affairs and Communications showed Japan's household spending edged up 0.3% in May, much better than the 1.2% decline expected by analysts polled by Dow Jones and Nikkei.

But the household spending data are volatile because the government doesn't survey the exactly same group of respondents from year to year. Part of the rise was likely due to the one-off rise in purchases of fuel-efficient cars and energy-efficient appliances due to government tax breaks for such products, analysts said.

"For several months such discrepancy between domestic demand and external-demand-driven industrial output may be sustainable. And certainly, paying labor less and producing more makes for better earnings," Parpart said in a research note.

Other data released Tuesday by the Ministry of Land, Infrastructure and Transport showed that housing starts in Japan plunged 30.8% in May from the same month a year earlier, down for the sixth straight month.

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